Question # 01 Abraham and Boling decided to admit a new partner Liu to a one forth equity interest in the partnership for an investment of $80,000. Prepare a general entry to record the admission of Liu. Also explain the calculation of Bonus to the existing partners or the incoming partner is computed? Abraham and Boling divide the profit and loss 60% to the Abraham and 40% to the Boling. At the present time the investment capital of each partner is $140,000.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question # 01
Abraham and Boling decided to admit a new partner Liu to a one forth equity interest in the partnership for an investment of $80,000. Prepare a general entry to record the admission of Liu. Also explain the calculation of Bonus to the existing partners or the incoming partner is computed? Abraham and Boling divide the
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